Canadian Pensioners May Be Receiving Fewer Benefits
than They Deserve

After auditing over 4,000 Canada Pension Plan recipients
between 2000 and 2004, CARP found that approximately 15% of
those audited were receiving lower monthly benefit
distributions than they were entitled to. Assuming that the
15% is extended to the rest of Canada’s two million
pensioners, the federal government could owe up to $1
billion in retroactive benefit payments, according to the
Toronto Star.

According to the study, 60% of underpayments – what CARP
calls ‘entitlement benefit errors’ – occur because people
do not take advantage of a rule that allows workers to
accrue pension credits when taking time off to rear
children. This child rearing dropout provision can’t be
applied automatically, since the relationship between child
rearing and time off work may be spurious, so many people
fail to apply for such benefit accrual, according to the
Star.

Another 30% of underpayments are due to a failure to
split pension credits after a couple divorces, according to
the report.

The federal government seems to be responding to the
problem, with Deborah Wallace, the head of the federal
department responsible for pensions, claiming that it has
already begun to investigate why more people don’t take
advantage of the child rearing pension credit, according to
the Star.

Retroactive application of the credit may be difficult,
however, since current pensioners often had children
decades ago. It will be difficult to discern the exact
dates of leave for child rearing.

In order to clear up any future confusion, CARP is
recommending that the federal government simplify the
pension plan application forms, since most errors occur due
to incomplete or incorrect applications, according to the
Star.